McMahon has worked at Sony Pictures since 1990, most recently as president and managing director for Sony Pictures Television in Europe.
In his new job he reports to Matt Brown, executive vice-president for SPHE internationally.
As well as building the digital business, McMahon will work on developing sales of DVDs and Blu-ray Discs, the high-definition format that Sony is championing.
He will also liaise for all European home entertainment activities with other Sony divisions, including Sony Electronics, Sony PlayStation, Sony Ericsson and Sony Music.
Sony Computer Entertainment is launching its PlayStationNetwork video delivery service in the UK, France, Germany and Spain in November, which will allow PlayStation3 and PSP owners to download full-length movies.
Brown said: "The home entertainment industry is a global business in transition as it incorporates new technologies from Blu-ray Discs to mobile platforms, to digital distribution.
"These developments, as well as the overall economic climate, present unique challenges.
"John brings to SPHE a strong reputation as a strategic thinker, a fresh perspective and an in-depth understanding of the international market. I am delighted to welcome him to SPHE."
McMahon's first job with Sony was in the legal department at Sony Pictures Entertainment in Los Angeles. He has been based in London since 1997.
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